College grads struggling to repay tens of thousands of dollars in student loans face a new threat: an emerging industry that sells borrowers costly and questionable "help" with debts.

Players in the industry can charge indebted borrowers thousands of dollars in fees for helping them enroll in federal loan repayment programs they could access themselves for free.

"Searching for Relief," a report released last week by the National Consumer Law Center, gives us a jolt of deja vu.

A few years ago, when the debt relief industry focused on consumers struggling with credit cards and foreclosure, we saw the same questionable practices outlined in this report – advance fees for thin promises of help, misleading marketing, practices that dance toward violation of consumer laws.

Now they're taking aim at our kids.

Regulators cannot turn a blind eye to this threat to people who are trying to build better futures for themselves through education.

The Federal Trade Commission, the Consumer Financial Protection Bureau and the Department of Education must act proactively to make sure misleading advertising isn't pulling people already struggling to make college loan payments further into debt.

College loan borrowers are a juicy new market for the debt relief industry. Collectively, they represent $1 trillion worth of fresh meat.

We failed to educate an entire generation of kids about personal finance. We let colleges dazzle them with "financial aid" that really boils down to loans. No wonder so many borrowers don't realize they're overextended until they leave school, when the payments come due.

When the Ohio Credit Union League surveyed credit union members about their college loan debts, 22 percent reported that they were not on track to make payments.

Enter the debt relief industry.

Free help available

Complaints about companies offering students help with their college debts began to trickle in to the National Consumer Law Center a few years ago through the self-help website it created for troubled borrowers.

"Complaints have increased so much in the last year," said Deanne Loonin, the report's author. "So many of the complaints were, 'They're not responding' and 'They're not providing the services.' "

The center dug into contracts, perused websites and test-shopped some of the companies to reveal a number of misleading statements and questionable practices.

It found companies wanted up to $1,600 to walk students through the government's free loan consolidation or repayment programs. Echoes of foreclosure rescue.

In a page from the old debt settlement handbook, most demanded advance fees -- an apparent violation of the Telemarketing Sales Rule, which prohibits debt-relief companies from accepting payment before they provide services.

Some of the practices NCLC spotted could, in the wrong hands, put students -- and their families – at risk of identity theft.

Many companies required students to hand over their federal loan application PIN. That PIN provides access not only to a student's federal loan history but to the detailed financial information families provide in FAFSA applications.

Some asked students to provide the company with power of attorney, a potent legal tool that gives the holder an ability to conduct transactions in a student's stead. Loonin noted that some of the powers of attorney were overbroad or had no expiration date. Students often weren't told how to revoke the power of attorney if they changed their minds.

College grads with money may want to pay for legitimate help navigating sometimes-clunky federal loan repayment programs, and the report found at least one company that marketed its services to well-employed graduates as a convenience.

But Loonin said many of the services seemed aimed directly at borrowers who are struggling to make ends meet – the ones desperate enough to pay for a promise of help.

The "shocking" amount of inaccurate information about federal programs on most sites raises questions, Loonin said, about the quality of assistance these companies can provide.

Regulators should heed the report's call for an investigation of this fledgling industry – now, before large numbers of consumers are harmed -- to determine what these companies are selling, whether borrowers can benefit from their services, how truthfully they advertise and whether they comply with existing state and federal consumer laws.

There's evidence that college loan debt is forcing young people to delay buying cars, starting families and purchasing homes -- all of the things that keep our economy chugging along.

We should all be concerned about an industry that could throw struggling young people further behind.

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